Paid maternity leave: is Australia ready?

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Should women get 14 weeks’ government-funded maternity leave? The federal election is about to have a new issue, courtesy of the Democrats. It could be a good thing for small business. By MIKE PRESTON.

The Government would pay 14 weeks’ maternity leave under a Democrat proposal. It would help SMEs compete with bigger business in a tight skills market.

By Mike Preston

Paid maternity leave has hurtled back on to the political agenda this week, courtesy of a well-timed private member’s bill by Australian Democrat Senator Natasha Stott Despoja. And small and medium employers could be among the biggest beneficiaries of a new scheme.

Until now, maternity leave has been an issue Australia’s major political parties have preferred to avoid, reluctant to foot the bill for a government-funded scheme and unwilling to face the political pain that would come with forcing the cost on to employers. Employers have made it very clear they don’t want to have to pay it.

But Stott Despoja’s bill, which would introduce 14 weeks of government-funded maternity leave paid at minimum wage rates, could see the issue pitched straight into the midst of a hotly contested election campaign.

Stott Despoja describes the timing of the bill (she will introduce it into Federal Parliament on Thursday) as “happy coincidence”, but she freely admits to hoping it will put pressure on Labor and the coalition.

“Surveys and research tell us families want paid maternity leave and women want paid maternity leave, so it’s hard to understand why the two major parties are dragging their heals on this when they both say work and family issues are a priority,” Stott Despoja says.

According to a Newspoll commissioned by the National Federation of Australian Women, 80% of men and 76% of women would support a paid maternity leave scheme in which costs are shared by government, employers and employees, with support particularly strong among 18 to 24 year olds.

For employees, paid maternity leave goes straight to the heart of how to achieve work/family balance, the issue memorably described by Prime Minister John Howard as a “barbecue stopper”. For SME owners, however, it is important because of it represents part of the solution to a problem that might better be described as a business stopper: the skills shortage.

Finding and keeping skilled staff rated as by far the biggest worry for SME owners in the August Sensis Business Index, with 14% describing it as their top concern. This was no surprise; the shortage of suitable employees has consistently rated as the biggest concern reported by SME owners over the past year and a prime concern for much longer than that.

The ability to offer paid maternity leave can act as something of a trump card for employers racing to attract the few skilled staff available in Australia’s busy-to-bursting economy.

However, the significant cost involved with paying an employee on maternity leave and their replacement means it is an offer that most SMEs cannot afford to make.

The disadvantage SMEs suffer when it comes to paid maternity leave is illustrated by 2005 data from the Australian Bureau of Statistics that shows the bigger the organisation, the more likely its female staff are likely to take leave when pregnant or soon after the birth: just 29% of staff in workplaces of fewer than 20 employees; 57% in workplaces with 20–99 staff; and 68% in workplaces with more than 100 staff.

Tellingly, 45% of women in small workplaces took no leave at all when pregnant and after the birth of their child – suggesting they may have simply quit their jobs – compared to just 18% of women in workplaces of between 20 and 99 staff and 16% for those with 100 plus staff.

That big business enjoys the advantage it has over SMEs when it comes to paid maternity leave can perhaps be seen in the fact that two groups who agree on most matters, the Council of Small Businesses of Australia and the Australian Chamber of Commerce and Industry, hold different policy positions. COSBOA backs the notion of a government funded paid maternity leave and ACCI opposes it.

Stott Despoja rejects the argument that government-funded paid maternity leave costs too much – the baby bonus payment currently drains government coffers of close to $1 billion each year, compared to no more than $500 million for Stott Despoja’s proposal.

Labor has promised to give employees the right to request a further 12 months unpaid parental leave on top of the current 12-month entitlement, but on the issue of paid leave has committed only to “examine further reforms”.

Stott Despoja’s bill could force Labor to take a position on paid maternity leave in the lead-up to an election where it is desperate to avoid being embroiled in potentially divisive political arguments.

The Government has promoted its Baby Bonus payment as preferable to a comprehensive paid maternity scheme, a position it is unlikely to abandon as the election nears. The Howard government does not face the policy conundrum that Labor does, but runs the risk of being left flat-footed if Labor moves to embrace paid maternity leave during the election campaign.

While the debate continues to rage in Australia, the international consensus in favour of paid maternity leave was forged long ago.

Sara Charlesworth, a senior research fellow in the Centre if Applied Social Research at RMIT and a leading researcher on work/family balance, says apart from Australia, the US is the only other OECD country yet to adopt some form of paid parental leave.

“There has been a lack of political will from both sides of politics and, especially under the current Government, there is a deep ambivalence about working mothers and the workforce, despite the fact that we know we desperately need to enlarge the workforce given the current skill shortage and the ageing of the population in the longer term,” Charlesworth says.

While SMEs owners are often fearful of having to foot the bill for paid maternity leave, Charlesworth says they have the most to gain from the introduction of a government-funded scheme.

“Clearly small businesses have less capacity to pay, but a government-funded baseline helps small businesses compete with larger competitors for staff and allows them to devote the resources they do have to other less costly measures.”

In some countries, paid maternity leave policy is even used to redress the balance between SMEs and big businesses. Charlesworth says in the UK, where paid maternity leave has been in place for close to 30 years, small businesses receive a 104% reimbursement of the amount they pay in maternity leave to employees to compensate them for administering the program on behalf of the Government. Big businesses, by contrast, are reimbursed at 96% of the full amount, reflecting their increased ability to meet the cost of paid maternity leave.

Australian SME owners clearly have a reason to watch the ensuing debate on paid maternity leave with interest. While we’re waiting, however, there are measures businesses can adopt to make is easier for employees that are pregnant or that have parental responsibilities to continue to make a contribution.

Join the debate: email: [email protected]

What do you think? Should Australian women get paid maternity leave? For how long? Who should pay? Are small businesses at a disadvantage in competing for skilled staff? How else could we make it easier for parents to manager young families and work?


Five tips for keeping staff with family responsibilities

1. Make a small maternity leave payment – with a guarantee they will return: For highly skilled employees, some employers are offering shorter periods of paid maternity leave but requiring employees to sign contracts that ensure they will return to the business, according to John Banks, a director of human resources outsourcing business Talent2.

“This works where departing mums have an intention for coming back – it is no loss to them but gives the employer confidence that maternity leave isn’t a wasted investment,” Banks says.

2. Keep absent employees in the loop: It has to be a two-way street, but Banks says anything from inviting parents on leave to social events to keeping them up to date with major changes in the business can increase the likelihood that they will return.

“A common complaint we see is that mums leave to have a baby, come back the job and find the whole team has changed and it’s not the same, which can be very be isolating and may mean they will not stay,” Banks says.

3. Use technology and trust your staff: Remote technology means many employees can work quite productively from home while caring for children, according to Margaret Kirby, the managing director of recruiting firm iGroup.

“You need to trust your employees to get the work done without someone looking over their shoulder,” Kirby says. “Constant communication can help you build that trust, as well as making sure employees working from home aren’t isolated.”

4. Flexible work hours: Increasingly SME employers are offering their staff flexible work arrangements, with flexibility around school hours and child care being the most common arrangement.

Talent2’s Banks says employers need to talk to staff to find out where their interests overlap. “An employee in a sandwich bar needs to understand they can’t have lunchtimes off, but often employers and staff can reach mutually agreeable arrangements around things like pregnancy, childcare and sickness.”

5. Sometimes they just want more pay: Paid maternity leave may be a hit with women in their 30s, but for many younger employees of both sexes it’s not a big attraction, according to iGroup’s Kirby.

“Most people of Gen-Y age are focused on the here and now – I think paid maternity leave would be attractive for only a very small percentage of them,” Kirby says. “The lesson is really just to talk to your staff and find out what they want.”


To read more about recruiting and retaining staff go to our Managing People section.


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